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The temptations of neo-volkskapitalisme

Trudi Makhaya, former Deputy Competition Commissioner, is an independent economist and strategist. A Rhodes scholar, she has also worked at Deloitte and Genesis Analytics.

Our country is still reeling from the sadistic economic relations that locked black South Africans in a state of near-slavery for too long. That we have not yet reached the Promised Land is indisputable. But there might be something useful to salvage from the old country. What this is not, however, is the creation of a new racially-defined elite, with the hope that wealth somehow, somewhere, will trickle down.

Sol Plaatjie captures well the incessant demands of a segment of the nation in the early years of the South African union: “Concession after concession was wrung from the government by fanatically Dutch postulants for office, for government doles and other favours, who, like the daughters of the horse-leech in the Proverbs of Solomon, continually cried, ‘Give, give.’”

These demands, made by politically ascendant Afrikaners against the rest of the new union of South Africa, sounded the death knell for black economic aspirations, led to the odious Natives Land Act whose initial impact is documented by Plaatjie, and culminated in the twentieth century sin of Apartheid that continues to mark this economy.

But much as Afrikaners came to this land as colonists, in their march towards Apartheid, they thought of themselves as victims of war brutality meted out by the British. This bitter politics of resentment mutated into a violent, extractive economy powered by the toxic fuel of racial capitalism. This is how genuine wounds are used in the service of elite advancement and the marginalisation of the majority.

Our country is still reeling from the sadistic economic relations that locked black South Africans in a state of near-slavery for too long. That we have not yet reached the promised land is indisputable. Even the much-quoted Goldman Sachs report on the achievements of post-Apartheid South Africa makes some stark references to the massive challenges that remain including unemployment, inequality, a low savings rate and poor human capital outcomes in education and health.

But it is not wise to stay bitter and angry for too long, as the poet Mungoshi advises, and there might be something useful to salvage from the old country. And so in the economic sphere, it would be mindless to ignore the industrialisation that took place under Apartheid.

In a recent paper I co-authored with Dr Simon Roberts, we acknowledge the role of state-led investments under Apartheid in key infrastructure that facilitated South Africa’s industrialisation. Such investments include the silos that supported commercial agriculture and agro-processing, the rail infrastructure that facilitated the movement of goods in mining and agriculture and investments in technology in selected sectors. Sasol, AFGRI and Mittal Steel and other conglomerates were developed under this economic policy framework.

Afrikaner nationalism, projected into the economic sphere as volkskapitalisme (people’s capitalism), sought to advance the economic lot not of the people, broadly defined, but of Afrikaners in particular. This advance would occur at the expense of English-speaking white South Africans, who were represented as rich imperialists and the black majority, who were feared as potential competition especially in the labour market. The advocates of volkskapitalisme presented it as an economic framework to uplift ordinary white Afrikaners from poverty. Volkskapitalisme was supported by the state, and ran parallel to direct measures by the state to favour Afrikaners above everyone else.

Looking back at this state-led growth spurt, it is tempting to argue for a similar development path for a modern South Africa, in spite of its non-racial aspirations. We forget the distortions that accompanied this growth model including state-sanctioned cartels in crucial input markets and the horrors of Apartheid geography and job reservation.

This hankering to the past is sometimes couched in the language of the East Asian-style developmental state. Given our history, this way of thinking evokes a lost racially-defined Eden that needs to be re-created into a contemporary African, nationalist super-state that dominates the economy and facilitates the creation of black (African, in particular) oligarchs. For readers of isolationist fantasies such as Capitalist Nigger, the mobilisation of working-class Afrikaners savings for what were ultimately elitist projects is worthy of emulation.

This is the statist racial capitalism that sees businesspeople in KwaZulu Natal demanding crude measures to allocate economic opportunity to black Africans to the exclusion of Indians. You will note that theirs is not an argument about broad-based empowerment. This lobby does not seek for business opportunities to be channelled to the most disadvantaged members of society. Under their logic, a black multi-millionaire deserves preference over a young, struggling ‘Indian’ small businesswoman. These demands for tenders are the most disturbing manifestation of an emergent neo-volkskapitalisme, based as they are on the politics of resentment at the expense of the economics of inclusion.

This neo-volkskapitalisme is seen in arguments advanced in that curious debate about the financing of luxury retailer Luminance by the National Empowerment Fund. I think that venture has reasonable prospects for profitability. Even development financiers should diversify their portfolios, which might mean some investments that could be hardly described as social enterprise. These are the arguments I might have used on the proposition side of that debate. Yet, the dominant arguments focused on how there were not enough black people, especially women, in luxury retail. The neo-volkskapitalisme disciples want Ms Dhlomo, with the support of the state, to become the black Rupert much as the Broederbond desired the creation of an Afrikaner Rhodes. That this was an opportunity to put pressure on Ms Dhlomo to integrate local design talent even more deeply into her business, a requirement that would fall squarely within the government’s own Industrial Policy Action Plan, was generally lost in the debate. This is how state intervention is blunted in the neo-volkskapitaliste vision.

Where we have complex questions about beneficiation in the iron-ore and steel value chain, we are treated to a side-show about mineral rights that consumes decision-makers’ energy and diverts minds from the real issue of how to get cheap steel to South African manufacturers. Viewing economic policy from this lens becomes only about racial aesthetics, not making crucial compromises for the future.

The youth wage subsidy, by no means the only solution to dealing with youth unemployment but an idea that deserves a chance, is stalled because some among us believe that the government should create jobs, and should not have to spend resources providing the incentives to the private sector to do so. And if the government can’t create jobs, it must provide welfare. Social assistance becomes not a mechanism to help people engage robustly in the economy, and to also catch them when they fall, but an end in itself. The left might have no time for kapitalisme, but they believe the state should be at the core of the volk’s economic lives without much thought to the unintended consequences of such state dependence.

The reality is that there might not be much to salvage from the old country, especially in a globalised world that demands the optimisation of comparative advantage without much reference to the politics of identity. Of course, there is a way to deal with distributional concerns even in this world, which is why a vision of inclusive growth is the most sound basis for economic policy. We now know that volkskapitalisme was, in the end, not even about the volk but a moderately successful elite project based on mass exploitation. Yet today, the dominant voices in our discourse are those of failed oligarchs like Julius Malema and neo-volkskapitalisme disciples like Jimmy Manyi.

For our future, the foundational idea cannot be the creation a new racially-defined elite, with the hope that wealth trickles down (Because this new elite will be patriotic? Yeah, right!) but to create ladders of economic opportunity that can be accessed on an impersonal, meritocratic basis. Looking forward into the ‘adult years’ of our democracy, what is needed is an economic constitution that speaks to a just, entrepreneurial and open society. DM


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